Decided to make up a small sheath for a utility type knife. The section that I have stitched the belt loop in place those stitches are very close to where the blade will be inserted. I'm concerned that the repeated draw and insertion may cut them over time.

Thanks guys! Not sure of the tanning method for the thinner pieces. Picked those up from an upholstery shop of various cuts. The original intent was to be used as an overlay on the outside of the sheath. I'll rework this so that the stitching is recessed and skive a piece over to that section with a known leather. Haven't had to do this on the usual sized sheaths so a new adventure.

Use the groover as Argel55 mentioned and set stitches just below the surface, tap down smooth with flat faced cobblers hammer. Most furniture and garment leathers are chrome/chemical tanned. If they get a little damp will start rust/corrosion on blades and/or guards.
Another technique that is seldom used these days - pre-punch your stitfhing holes then use a very sharp chisel to curl up the leather over the length of the stitch line, pull back the flap and stitch then glue the flap back down over the stitches. Again, tap down flat with hammer - totally hidden stitches.